Lost money in child services found

Friday, June 25, 2004 | 9:31 a.m.

CARSON CITY -- Because of poor communications and a lack of training, a state program that provides treatment for emotionally disturbed children failed to collect millions of dollars in available federal funds to offset its cost.

A legislative audit released Thursday said the state Division of Child and Family Services has "opportunities to increase revenues from Medicaid by several million dollars annually by improving its billing process."

Sen. Ray Rawson, R-Las Vegas, chairman of the Legislative Audit Committee that accepted the report, called it a "glaring problem."

Assemblyman John Marvel, R-Battle Mountain, said it was hard to understand because the division is under state Department of Human Resources, which also supervises Medicaid.

The committee directed its audit staff to check with human resources to see if other agencies are missing out on Medicaid funds. Medicaid provides medical care for the needy, and the federal and state government split the cost.

The audit estimates the Division of Child and Family Services could recover about $3.1 million from the Medicaid program for the past two years. It also estimates the division could collect an extra $2.5 million a year in the future if it shores up its accounting system.

The division was recently criticized in a federal report and was told to improve its services to children. Federal inspectors in 2002 found that inmates at the state boys' reformatory in Elko were abused both physically and emotionally by staff.

Diane Comeaux, deputy administrator of the division, told the audit committee that the division has started trying to recover the lost money and it will "make sure it will maximize federal revenues" in the future.

Part of the problem, she said, was that clinical people were in charge of the financial details. Changes are being made to improve the oversight of the budget. She said there has been a "lack of trained staff, a lack of policies and procedures and poor oversight."

The agency has a new computer system that will come on line next month that should solve some of the problems, Comeaux said.

Sen. Bob Coffin, D-Las Vegas, said the agency became aware of some of the problems earlier and had asked the 2003 Legislature for the money for the new computer system.

Deputy Legislative Auditor Richard Neil said the division spent about $26 million in fiscal year 2003 to serve emotionally disturbed and behaviorally disordered children and their families. It has a number of programs including the Desert Willow Treatment Center, a 56-bed psychiatric hospital in Clark County.

Neil said the division had the opportunity to bill Medicaid an additional $1.9 million for the cost of operating Desert Willow but didn't do it. It cannot recover money lost in the past, but it can start billing in the future.

The division did not bill Medicaid for the full cost of services provided in other programs for these emotionally disturbed children, he said. Division personnel indicated they did not realize that Medicaid offered the opportunity to receive reimbursement based on full costs of services, he said.

Auditors suggested the division could collect another $35,000 a year by charging private insurance companies the full cost of services.

The Southern Nevada Child and Adolescent Services, based in Las Vegas, made errors in 20 percent of its billing for outpatient care, the auditors said. Based on that finding, the state could have billed Medicaid for another $100,000.

There were "significant control weaknesses over revenues" at the Southern Nevada Child and Adolescent Services, the audit said. Payments for services were not recorded in its accounts receivable system for years and there were other problems.

"These weaknesses increase the risk that losses could occur and go undetected and that the agency will not bill for all of its services," the auditors said.

Comeaux said some of the bookkeeping had been done manually and the new computer system will correct that. She said a consultant will be hired to recoup all the lost Medicaid funds for the past two years.